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Estate Planning

ESTATE PLANNING: Wills, Trusts, Probate, and Powers of Attorney

By: Thomas L Selken, Attorney

Let Thomas Selken prepare your will and testament

Probate:

When a person passes away, certain documents need to be filed with the courts to transfer ownership of the decedent’s assets. This court process is called probate. If the decedent did not have a valid will at the time of death, Colorado, as well as the other states, have adopted laws establishing who are the heirs to receive the assets. Those heirs are relatives of the decedent, however, they may or may not be the people the decedent wanted to receive the assets. If no relatives can be located, the State of Colorado receives the assets. It is important to have a will so that a person can select who is to receive the assets and who is to be in charge of handling the estate.

Wills:

There are three (3) general categories for wills:

Simple or Basic Will. If the person preparing a will (a testator) does not have minor children and does not have an estate greater than the then current amount that will be exempt from federal estate tax ($5,340,000 in 2014), a basic will is adequate in most circumstances. The testator selects the beneficiaries to receive the assets upon the testator’s death and names the person or persons to be in charge of handling the estate.

Will with a Trust for Minors. Children under the age of 18 years cannot inherit directly, someone needs to inherit the assets for them. If a testator has minor children who the testator wishes to receive a portion of the assets, this will creates a trust to receive the money for said minors and names the person in charge of that money (a trustee) to financially care for the children until the children reach an age of majority picked by the testator.

Tax Planning Will. If a testator has an estate in excess of the maximum amount which can pass to heirs without having to pay federal estate tax, a tax planning will can help to avoid or at least lessen the federal estate tax that might be due as a result of the testator’s death.

Powers of Attorney:

In addition to a will, it is common for a person creating an estate plan to have financial and medical powers of attorney. These documents allow someone else to make both financial and medical decisions for a person in case that person is incapacitated. Without powers of attorney, if a person becomes incapacitated due to an illness, injury, etc., in order to handle that person’s business and medical affairs, documents need to be filed with a court to have a conservator and/or guardian appointed for that person. The court process will likely require, the conservator/guardian must also file annual reports with the court advising what is the status of the incapacitated person. This all creates more cost for the incapacitated person and the person named by the court may not be who the incapacitated person would have selected.

Living Trusts:

Some people prefer to create living trusts as part of their estate plan. There are various types of trusts, but the most common is a revocable living trust. Once the trust is created, the person transfers all of his or her assets into the trust so that upon death, the person owns nothing in his or her name, the trust owns everything. All of the assets are titled in the name of the living trust and would not be listed in the individual’s own name. The trust reads like a will in that the person names a trustee to be in charge of the assets and states who is to receive the assets. The main advantage of this type of trust is that upon the person’s death, there is not a need to open a probate case and, thus, the court process is avoided. When creating such a trust, it is important that all of the person’s assets are placed in the trust because if some of the assets are still in the individual’s name when the person passes away, probate will probably still be needed to transfer those assets to the heirs. Many states have very complicated probate laws and, thus, trusts are created to avoid the probate process. However, Colorado Probate Law is streamlined and most estates can be opened, administered and then closed without actually having to appear in court. Rather, the appropriate papers are filed with the court, the court approves them and then the estate is ultimately closed with no court appearances being necessary.

Disclaimer: Thomas L Selken PC does not form an attorney-client relationship with you merely by virtue of publishing this web page or receiving an unsolicited phone call, fax, text or e-mail message. We do not request or anticipate that you will disclose any private information in unsolicited communication with our firm.